Guten Morgen!

A crazy week for German politics is over – more on it below and in this week’s WOOM. We wish you a wonderful start into your weekend and week with the newest Krautshell edition.

Enjoy and ping us for more!

Anna                                Christian

Post-Election Analysis: The Success of the Incumbents

We promised you a post-election analysis and of course we deliver. On Sunday, the people in the states of Baden-Wuerttemberg (BW) and Rhineland-Palatine (RP) casted their votes and decided they want to keep their governments, or at least their Minister-Presidents. The Greens and Minister-President Winfried Kretschmann in BW can be happy about an even better result than five years ago and can dive into coalition negotiations with BIG self-confidence. The SPD and Minister-President Malu Dreyer in RP weren’t able to increase their last result but remained stable. Given there was speculation about the CDU potentially flipping the state for the first time in 30 years, this can go down as a victory in the SPD’s books. For the CDU, the results in both states are a true catastrophe with the worst result ever in BW (the second worst being the result from five years ago, bad trend).

Both states could possibly build coalitions without Merkel’s CDU. RP already showed us how: the past five years were a coalition of SPD, Greens and FDP, and it is likely that this coalition will continue. In BW, the same configuration as in RP would be possible. However, the Greens in BW are far more conservative than elsewhere, and it seems Winfried Kretschmann is open to continuing his Green-CDU coalition. Still, the notion that governing without the CDU is possible is the key take-away for the SPD and the opposition parties on the federal level. It gives them hope the voter might also remember this when it comes time for federal elections in September. Detailed results of the state elections can be found here.

The EU’S Pandemic Band-Aid: the COVID-19 Travel Certificate

Currently, if you mention the words “COVID-19 vaccine” to someone in Europe, you’re most likely to get a disapproving headshake and a sigh; it’s fair to say the EU vaccination-fiasco we reported on two weeks ago hasn’t gotten any better. While the US is on a hyper-speed course to vaccinate its entire population before the Summer, the EU seems to be somewhat admitting defeat in its failure to procure enough vaccine doses. Therefore, the Commission came up with a temporary fix: the Digital Green Certificate, or simply put, a Coronavirus travel certificate.

According to Internal Market Commissioner Thierry Breton, the certificate will consist of a QR code on users’ smartphones (or paper version for those who are not technologically inclined) and will detail whether a person has been vaccinated or recently negatively tested. Some sources have even indicated the certificate could display medical certificates for people who have recovered from COVID-19 in the last 180 days. As always, not all stakeholders in the EU are on the same page regarding the feasibility of the Digital Green Certificate. Unsurprisingly, tourism-heavy countries like Austria and Greece welcome the proposal with open arms, with Austria’s Chancellor Sebastian Kurz even stating he doesn’t want to wait for implementation at the European level. Meanwhile, director of the European Centre for Disease Prevention and Control Andrea Ammon pointed out it’s too early to be giving extra rights to the vaccinated, as there’s not enough information yet on how long immunity lasts. And, of course, the million-dollar question: do we really want to create an institutionalized system of haves and have-nots regarding vaccinations? I think Dr. Seuss wrote a book about this one…

The Greens: Everything Is Possible

This Friday, the Greens also presented their election program, and of course we’ve already taken a deeper look. The program’s motto, “Everything is possible” can be understood for both Germany and the party itself. The program really seems like the party’s “final” step in transforming from being the niche party for eco-topics to becoming a mainstream party with a (very) green touch. Highlights of the program include massive investments in decarbonization, measures to mitigate Germany’s ongoing socio-ecological change, a higher maximum tax rate and a capital tax, a more ambitious climate target of 70% CO2 reduction by 2030 (compared to 1990), stricter regulation of big tech companies and a speed limit on German autobahns. Furthermore, the Greens want to “modernize” the debt brake mechanism to enable more investment in times where Germany is behind in climate and digitalization.

The Greens have to fight with the image of being the party of bids and bans. This is felt when reading the program,  as the Greens elaborate extensively on market-based mechanisms to foster the transition towards a more digital and climate-friendly industry and society. There are various ideas that could have come from the liberal FDP but also other reforms, like in the labor market, that read a lot like a social democratic position paper. The Greens want to become the party in the middle of society and are taking a pragmatic approach to achieve this. Given the current polls, the chances for the Greens to become part of the next government remain high. As always, if you are interested in the details of the program, ping us for more.

German Vaccine Chaos

While President Biden just announced that the USA managed to administer 100 million vaccine doses in just 58 days, Germany looks like a sloth. As if we weren’t slow enough, this week the Federal Ministry of Health followed a recommendation by the Paul-Ehrlich-Institute (a bit like a German version of the FDA) to stop the administration of the AstraZeneca vaccine. This was based on the suspicion that the vaccine was causing deadly (and very rare) thrombosis in patients. Even today, this can be neither be proved nor excepted.

Still, on Friday, the European Medicines Agency recommended to continue administering AstraZeneca vaccines as the advantages would be considerably higher than the risk. However, the communication about the topic was poorly managed and could have negative implications. The general tenor is already bad because of the slow vaccination progress and conflicting messages about vaccine safety are certainly not helping. As one can imagine, discussions at the “vaccine summit” on Friday were probably not pleasant for Health Minister Spahn (CDU). One of the main demands: calls to assess the quality of Russian vaccine “Sputnik V” become louder. Or as Bavarian Minister-President Söder (CSU) puts it: “Everything that can be inoculated needs to be inoculated!”

Into the Future – With €95.5 Billion

Yes, that’s the budget until 2027 for the EU’s research and innovation program “Horizon Europe” as you might remember from our reports last year. The budget might have been agreed upon last year, but this past week the structure was finally formulated, and calls for applications have begun. Horizon Europe is mainly based on three pillars (and some side programs) that focus on the areas of excellent science (pillar 1), global challenges & European industrial competitiveness (pillar 2) and innovative Europe (pillar 3). In the context of pillar 2, the “Horizon Europe Strategic Plan” which runs until 2024 and sets out key strategic orientations for the support of research in EU, was adopted. In pillar 2, various clusters like health, climate or digitalization are defined, to which funds are administered.

Besides the pillars and clusters, the EU defined so-called “missions.” In contrast to the cluster, the mission areas have clearly defined targets regarding what is to be accomplished in which timeframe. For instance, one mission is called “climate-neutral and smart cities” where the EU aims to achieve no less than 130 climate-neutral (and smart) cities by 2030. The research and innovation program’s ambitions are certainly reflected in the volume of its funding. The EU desperately needs some progress in topics like digitalization where it is far behind the US or China. To catch up, the target of enabling a better research-to-industry transformation will need particular support. If you are interested in the program, more information can be found here. If you want to know, whether you are eligible to apply for funding, feel free to ping us!

Breaking the Northern Ireland Protocol: the EU is not Pleased

This week, yet again, the EU is accusing the UK of starting down a path of deliberate breach of international law. This time, it’s regarding the flow of goods to and from Northern Ireland. In the best way we can put it: as part of the 2019 Brexit treaty, the Northern Ireland protocol was implemented to avoid a land border between the North and the South of the island. It stated that while Northern Ireland remains part of the UK, it must comply to EU customs rules for goods to keep its Southern border open. Therefore, any goods coming across the Irish Sea from Great Britain must adhere to EU standards and may be subject to border checks.

According to the Brexit Deal, starting on April 1^st, firms transporting food between the British mainland and Northern Ireland (and vice versa) would have to submit extra paperwork for compliance purposes. Facing pressure from inside his own party and from pro-UK politicians in Northern Ireland to renegotiate this part of the Brexit Deal, British Prime Minister Boris Johnson decided to waive these rules temporarily. Understandably, this move made EU officials angry. In fact, the EU has even written a letter of formal notice to the UK for breaching its obligations. Now, the UK has one month to explain its actions or backpedal. If the EU is dissatisfied with the UK’s response, it can submit a formal request for the alteration of the policy. If nothing happens by then, the EU can eventually take the case to the Court of Justice of the EU, and a favorable decision for the bloc could result in “financial penalties” against the UK. Essentially, the EU is asking the UK the age-old question: do you want to do this the easy way or the hard way?

• Autonomous Driving: We told you a law was coming for autonomous driving and now it’s a reality. For the sake of variety, we’ll refrain from presenting the draft in detail this time. But, we are of course always happy to give you more detail. Just ping us if you’re interested!

• Oh No!… Anyways: Armin Laschet is most likely to become the CDU’s Chancellor-candidate to succeed Angela Merkel in the chancellery. However, a new survey showed that 73% of Germans don’t think he is a suitable candidate. “Anyways!”, says the CDU. The only alternative would be sister party CSU’s leader Markus Söder and it seems like the CDU still favors Laschet in that case.

• A Classical Profit Margin: Since December, people over 60 can get free FFP2 masks in pharmacies in Germany. It now became public that the Federal Government reimbursed the pharmacies with an average of 6€ per mask. The purchase price of the masks is at approximately 0.60€ for the pharmacies. The deal cost the taxpayer nearly €500 million and there are now discussions about whether this could have been cheaper.

Per Aspera ad Astra*

As expected, Christian-democrats got pretty bad results in last week’s elections (see article). Cases of corruption and a not-so-well perceived corona crisis-handling, with special focus on allegedly false decisions by CDU Health-Minister Jens Spahn obviously didn’t help as well. However, blaming Spahn for the crisis-management while the Prime Ministers of the Länder decide measures such as the lockdowns is a bit unfair. Granted, the comparison is (a little tiny bit) shaky, but if Helmut Kohl had negotiated with Michail Gorbachev while the Länder had owned the constitutional competence for foreign policy decisions, things could have ended differently, too.

Now, not only the Länder have their competences: The Paul-Ehrlich-Institute, the body responsible for approving the safety of vaccines, recommended to pause vaccinations with AstraZeneca. So, Minister Spahn stopped those vaccinations until further notice and all reopening plans became a dog’s breakfast.

A split second later, the institute’s recommendation was widely regarded as overly cautious and Spahn was hit like a public boomerang. What normally would have been regarded as a clear case of a Minister simply following scientific advice was perceived as a political mistake. Then, the European Medicines Agency officially challenged the decision, and it was eventually reversed. Spahn is probably facing the respective negative public feedback like 

It might not become an AstraZenecaGate but somehow nomen est omen: As clear as the sky seems, those stars will only be reached through hardship, whichever politician is in charge. 

*Latin for “through hardships to the stars”